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American Electric's (AEP) 199MW Wind Project Starts Operation

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Zacks Equity Research
·3 min read
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American Electric Power Company Inc. AEP recently announced the kick-start of commercial operations of the Sundance Wind Energy Center, located in Woods County, OK. With a generation capacity of 199 megawatts (MW), this wind project will offer 1,485 MW of clean energy to American Electric’s subsidiaries, Public Service Company of Oklahoma (PSO) and Southwestern Electric Power Company (SWEPCO).

The Sundance Wind Energy Center is part of the company’s North Central Wind project worth $2 billion, which on completion by 2022, will generate enough energy to power 440,000 homes.

American Electric’s Clean Energy Take

Realizing the fact that clean energy holds key to future electricity generation, utilities including American Electric have been rapidly expanding renewable assets. The commencement of operations at the Sundance Wind Energy Center also affirms the fact.

As of Dec 31, 2020, the company had approximately 1,549 MWs of contracted renewable generation projects in service. In addition, its subsidiaries had approximately 137 MWs of renewable generation projects under construction, with total estimated capital costs of $208 million related to these projects.

Completion of North Central Wind Energy Facilities will help American Electric’s customers to save about $3 billion, net of costs, over 30 years.

Meanwhile, AEP Energy Partners — a subsidiary of American Electric — is seeking proposals for off-take from new solar, new/repowered wind facilities and stand-alone or co-located Battery Energy Storage Systems located in PJM.

Other Utilities Following Suit

Per the latest report by the American Clean Power Association, wind projects totaling 34,757 MW were under construction or in advanced development at December 2020-end. No doubt, this reflects solid opportunities of the U.S. wind market. With the Utility sector rapidly making a transition toward a cleaner environment, a handful of utilities like American Electric are also expanding their wind generation portfolio.

For instance, Duke Energy’s DUK business subsidiary, Duke Energy Renewables, announced in March 2021 that it has begun commercial operation of the Frontier Windpower II project in Kay County, OK. The 350 MW windpower project is currently the largest project in the company’s fleet.

NextEra Energy NEE is currently the world’s largest generator of renewable energy from the wind. As of Dec 31, 2020, the company operated a total wind generating capacity of 18,551 MW. During 2020-2021, it expects to bring online an additional 5,500 MW of clean, emission-free wind energy.

Similarly, Public Service Enterprise PEG, better known as PSEG, recently completed the acquisition of a 25% stake in the Ocean Wind project — New Jersey’s first utility-scale offshore wind farm — from Danish energy company, Ørsted. With a generation capacity of 1,100 MW of clean energy, this wind facility is powered by General Electric’s Haliade-X 12 MW turbine.

Zacks Rank & Price Performance

American Electric currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past year, shares of the company have gained 3.6% compared with the industry's 9.3% growth.

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